Introdution To Finance

Introdution To Finance

• 1.
  Yousef Hani
• 2.
   The sciencethat describes the management, creation and study of money, banking, credit, investments, assets and liabilities.  Finance consists of financial systems, which include the public, private and government spaces, and the study of finance and financial instruments, which can relate to countless assets and liabilities.
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   Some preferto divide finance into three distinct categories:  Public finance.  Corporate finance  Personal finance.
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   Public Financeis the study of the role of the government in the economy through;  Efficient allocation of resources. (Example: Taxes & Borrowings).  Distribution of Income. (Example: Education, Transportation, Security & Healthcare).  Stabilization: (Example: Policies to address inflation & unemployment).
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  Public finance isconcerned with answering questions like;  How to maximize entity's (nations') revenue?  How to decrease entity's (nation’s) expenditures?  Where to spend & how much?  Privatization or nationalization?
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   The mainkey areas Public Finance addresses are;  Public finance management: Resource generation, resource allocation and expenditure management (resource utilization) are the essential components of a public financial management system.  Government expenditures: This includes all government consumption and investment; (Infrastructure, Research & development, Salaries, Education, Security, etc.)  Financing of government expenditures: Through Tax & non tax revenues, borrowing, printing money & privatization.  Public Finance Methodology: Macroeconomic data & statistics to support public finance economics (Generally referred to as fiscal or government finance statistics).
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   The financialactivities related to running a corporation through overseeing the financial activities of a company.  Corporate finance is primarily concerned with maximizing shareholder value through long-term and short-term financial planning and the implementation of various strategies.  Everything from capital investment decisions to investment banking falls under the domain of corporate finance.
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   Corporate financeis concerned with answering questions like;  How to maximize entity's wealth & profits?  How to maximize the value of its stock?  How tax planning can affect the entity's profitability?  How to handle market risks?
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   The mainkey areas Corporate Finance addresses are ;  Investment Decisions: Where Management must allocate limited resources between competing opportunities (projects).  Financing Decisions: To ensure that any corporate investment is financed properly.  Dividend Decisions: Whether to issue dividends, and what amount, and the form of the dividend distribution; cash or shares.
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   All financialdecisions and activities of an individual, this could include budgeting, insurance, savings, investing, debt servicing, mortgages and more.  Financial planning generally involves analyzing your current financial position and predicting short-term and long-term needs.  It also refers to the financial decisions which an individual or a family unit is required to make to obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events
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   Personal financeis concerned with answering questions like;  How can people protect themselves against unforeseen personal events, as well as those in the external economy?  How can family assets best be transferred across generations?  How does tax policy affect personal financial decisions?  How does credit affects the financial position?
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   The mainkey areas Personal Finance addresses are ;  Financial Position: Concerned with understanding personal resources available to cover personal wants & needs.  Protection: Concerned with the analysis of how to protect a household from unforeseen risks. (liability, property, death, disability, health and long term care).  Tax planning: Concerned with handling legally the payment of the least possible tax on income.
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   Investments: Concernedwith investing to create future wealth (Stocks, Bonds & Reals Estate)  Retirement Planning: Concerned with understanding how much it costs to live at retirement and plan for it.  Assets Planning: Concerned with planning for the disposition of one's assets after death.
• 14.
  Yousef Hani